Delhi High Court directs Ambience Group to deposit over ₹638 crores amid dispute with Indiabulls

The Delhi High Court recently directed Ambience Private Limited to deposit over ₹638 crores with the court registry in four weeks after IndiaBulls moved the Court over real estate group's failure to execute sale deeds for certain properties covered by Agreements to Sell (ATS) between them [Indiabulls Commercial Credit v. Ambience Private Limited]..Considering Ambience's 'admission' that Indiabulls would have a right to seek refund of the money paid by it if the housing units are sold, Justice C Hari Shankar said the least that Ambience can be directed to do is to deposit the amount paid to it by the finance company."Till then, Ambience shall continue to remain restrained from creating any third party rights in respect of the disputed units. On deposit being made as aforesaid, the restraint against dealing with the disputed units shall stand lifted," the Court ordered..Indiabulls Housing Finance had entered into ATS with Ambience Projects and Infrastructure in 2020. Despite payment of over ₹638.08 crores, Ambience failed to transfer ownership of the 273 housing units to Indiabulls. Pending arbitration, Indiabulls moved the Court under Section 9(1) of the Arbitration and Conciliation Act seeking directions to Ambience to deposit the amount. It argued that Ambience was in breach of the ATS under which it was required to obtain all necessary permissions from the statutory authorities and existing lenders for execution of a deed of conveyance and sub-lease deed in favour of Indiabulls .In response, Ambience contended that the ATS was not intended as instruments for sale of housing units but rather as a mechanism to secure advances provided by Indiabulls. The company stated that the ₹2,344 crore loan previously extended by Indiabulls had been repaid using funds advanced under the ATS, effectively rendering the agreements fulfilled. Ambience asserted that it was entitled to sell the disputed units once the advances were repaid. .Since the arbitral tribunal to adjudicate on the dispute had not been constituted, the Court proceeded to pass order under Section 9 of the Arbitration and Conciliation Act. It rejected the argument that ATS was not actually intended to be instruments of sale but only agreements under which the residential units of Ambience were provided as security towards the advances extended by Indiabulls. No prima facie case to that effect can be set to have been made out at this stage, the Bench said.“The incontrovertible position is, therefore, that Ambience has retained, with itself, the entire amount paid by Indiabulls under the ATSs, without executing any document of sale, in respect of any of the units forming subject matter of the ATSs, in favour of Indiabulls," it added..The Court also considered the argument that Indiabulls stands sufficiently secured by Ambience’s undertaking not to alienate the disputed units.In this regard, it opined that Ambience in its response before the Court had conceded the position that Indiabulls has a right to claim return of the amount paid in case of non-execution of sale deeds.Ambience has no legal or even moral right to hold on to the amounts as it has not executed a single sale deed in favour of Indiabulls, it added."In the present case, even the requisites of Order XXXVIII Rule 5 of the CPC would, in a sense, stand satisfied, in view of Ambience’s repeated insistence, predicated on the settlement deed, that it has a right to sell the disputed units. In view of the repeated assertion, by Ambience, of the said right, and given the position conceded by Ambience that if the units are sold, Indiabulls would have a right to seek to be returned the amounts paid by it to Ambience, the least that Ambience can be directed to do is to deposit the amounts paid by Indiabulls to Ambience towards transfer of ownership of the said units to Indiabulls," the Court said..Indiabulls was represented by Senior Advocates Rajiv Nayar and Dayan Krishnan with advocates Anirudh Bakhru, Karan Barioke, Ankit Banati, Adith Nair, Naman Gowda, Nikhil Rathi and Mallika Kamal. Ambience was represented by Senior Advocate Rajeev Mehra with advocates Anush Raajan, Madhusudan, Pradyumn Yadav and GS Sachdeva..[Read Judgment]